From Side Project to $12 Billion Acquisition: The MailChimp Journey
Company profile
Company business details
Motivation to build the product
The founders were motivated to start MailChimp as a side project for their design agency, aiming to simplify the cumbersome process of email newsletter management for small businesses.Problem that their product solves
MailChimp solves the problem of complex and expensive email marketing software by providing a user-friendly interface and a variety of templates. The end users are small businesses that need effective tools to connect with their customers and grow their brands, making this solution crucial for their marketing efforts.Their unfair advantage
MailChimp's unfair advantage lies in its freemium pricing model and user-friendly interface, which attracts a large number of small business users and allows them to scale effectively without high upfront costs.Strategies
Pre-Launch (Product Development & MVP)
Freemium Model Introduction (Profitability Growth)
In September 2009, MailChimp introduced a freemium model that allowed users to access basic features for free while offering premium features for a fee. This strategic move resulted in a 150% increase in paying clients and a remarkable 650% growth in profitability during the first year. By lowering the barrier to entry, MailChimp attracted a larger user base, which ultimately contributed to its long-term success.
Mentorship and Knowledge Transfer
In preparation for product launches, Bruce focused on mentoring key individuals within his teams to become 'voices' of the product vision. He identified two or three team members who could effectively communicate the product's stories and principles to others. This strategy ensured that the knowledge and vision were not solely dependent on him, allowing for a smoother transition and continuity in the product's development. By empowering these individuals, Bruce created a network of advocates who could help maintain the product's direction and integrity.
Launch Stage
Freemium Model Introduction
In 2009, MailChimp launched its freemium plan, which allowed users to access basic email marketing services for free. This strategic move was inspired by the growing trend of freemium models in the tech industry. The introduction of the freemium plan led to an exponential increase in user acquisition, growing from around 100,000 users to over a million within a year. This shift not only expanded MailChimp's user base but also positioned the company as a leader in the email marketing space, attracting attention from major media outlets and investors.
Freemium Model Introduction (Accidental Launch)
Ben Chestnut and his co-founder initially did not plan to implement a freemium model for MailChimp. They wanted to charge users for sending emails after allowing free sign-ups for email collection. However, due to a programmer's suggestion to simplify their product, they accidentally launched a freemium plan. This decision was solidified when Ben read a book summary on freemium, which inspired him to officially introduce MailChimp's freemium plan. This strategy led to a significant increase in user acquisition, tripling their growth in the following year.
Google Adwords for Initial Visibility
When MailChimp was first launched, the founders utilized Google Adwords to gain initial visibility and attract users to their platform. This strategy involved setting up targeted ads that reached potential customers searching for email marketing solutions. By investing in online advertising, MailChimp was able to quickly build a user base and establish itself in the competitive email marketing landscape.
Learn more about MailChimp
Bootstrapped to $12B: Mailchimp’s Ben Chestnut on Life After the Exit
How Ben Chestnut Bootstrapped Mailchimp to a $12 Billion Exit
What is Mailchimp and how does it work?
